Spain’s La Liga challenges Gulf states’ business model

 

By James M. Dorsey

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Saudi Arabia’s stunning sports acquisition blitz, alongside Qatari and Emirati European club purchases, may reshape the beautiful game, just not in ways Crown Prince Mohammed bin Salman and other Gulf rulers like Qatari Emir Tamim bin Hamad Al Thani envisioned.

The Gulf’s impact on European and world soccer could be determined by the outcome of a complaint to the European Commission by Spain’s top soccer league, La Liga. The complaint asserts alleged Qatari state aid to Qatar-owned Paris Saint-Germain (PSG) distorts European Union markets by paying above market sums for top players.

La Liga President Javier Tebas has frequently cited the example of the US$260 million PSG paid for Brazilian player Neymar in 2017 and US$160 million last year to retain Kylian Mbappé. Earlier this month, Neymar transferred to Saudi Arabia’s Al Hilal for US$100 million.

La Liga said it filed its complaint under newly enacted European Union foreign subsidies regulations. The rules empower the Commission to investigate funding by non-EU members of companies operating in Europe and "redress, if needed, their distortive effects.”

In a statement, La Liga said it “has filed a complaint alleging that PSG has received foreign subsidies from the State of Qatar, which has allowed it to improve its competitive position, thus generating significant distortions in several national and EU markets.”

La Liga asserted that "this enables them to boost their sporting performance, as well as affecting the ability of rival clubs to recruit."

A successful La Liga complaint would increase pressure on the English Premier League and the British government to take similar action against Saudi-owned Newcastle United and United Arab Emirates-owned Manchester City, even if post-Brexit Britain no longer is bound by European rules and regulations.

Citing Newcastle, Manchester City, and Qatar’s potential acquisition of Manchester United as examples, Gulf-focussed human rights groups called earlier this month on the English Premier League and the British government to ensure that state-aligned owners of clubs are barred from exercising ownership control.

The groups include ALQST for Human Rights, Emirates Detainees Advocacy Centre (EDAC), European Saudi Organization for Human Rights (ESOHR), Gulf Centre for Human Rights (GCHR), and International Campaign for Freedom in the United Arab Emirates (ICFUAE).

In letters to Premier League CEO Richard Masters; British state secretary for culture, media, and sport Lucy Frazer; and state minister for business and trade Nigel Huddleston, the groups said they were “concerned that the political, social, and cultural power associated with ownership of top English football clubs grants foreign states undue influence and provides cover for state authorities that continue to flagrantly commit grave human rights abuses.”

They insisted that “it is imperative that the Premier League adopts and implements sufficiently objective and robust ownership criteria to prohibit the takeover of English football clubs by individuals or entities susceptible to the influence of state actors or associated with human rights violations.”

Newcastle could prove particularly vulnerable. In contrast to Manchester City, Newcastle, like Paris Saint-Germain, is owned by a sovereign wealth fund.

In Newcastle’s case, it’s Saudi Arabia’s Public Investment Fund (PIF), chaired by Mr. Bin Salman.

When the fund acquired Newcastle, the Premier League said it had received “legally binding assurances that the Kingdom of Saudi Arabia will not control Newcastle United” but refused to provide chapter and verse on those assurances.

The human rights groups assert that a California court filing in a case involving PGA Tour, the organiser of golf’s flagship events, and LIV Golf, a PIF-owned start up, calls the assurances into doubt.

The filing identified the PIF as a “sovereign instrumentality of the Kingdom of Saudi Arabia.” The filing said the Fund’s governor, Yasir al-Rumayyan, who also chairs Newcastle, was “a sitting minister of the Saudi government.”

The court case was shut down after PGA and LIV Golf agreed to merge.

Unsurprisingly, the Saudi player acquisition blitz that has netted the kingdom 15 foreign players, including superstars Cristiano Ronaldo, Karim Benzema, and Neymar, has ruffled European soccer’s feathers.

With Saudi Arabia’s Al Ittihad trying to woo, so far unsuccessfully, Liverpool’s Mohammed Saleh, club manager Jurgen Klopp called on world soccer body FIFA to ensure the kingdom abides by Europe’s transfer window.

“It's challenging for everybody and we have to learn to deal with it… But the authorities should make clear that if you want to be part of the system then you do your business at the same time like all the others… I am pretty sure FIFA could do it like this clicks fingers. I am not sure they want to, but they could,” Mr. Klopp said.

The Premier League’s transfer window closes September 1 as opposed to the Saudi window, which is open until September 20.

Mr. Klopp’s pessimism may be justified. FIFA expects a revenue boost when it launches its overhauled Club World Cup in 2025.

An influx of star-studded Saudi clubs would be welcome. The kingdom’s Al-Hilal, the winner of the 2021 Asian Champions League and, currently, the world’s top net spender, has already qualified.

To be fair, Saudi Arabia’s ownership of Newcastle has benefitted the club in various ways.

The club’s day-to-day managers, minority co-owners Amanda Staveley, her husband, Mehrdad Ghodoussi, and Jamie Reuben, have improved staff morale and professionalized the club’s women’s team.

They introduced a living wage higher than the minimum wage, beefed up staffing, and splashed US$500 million on new player acquisitions.

Like Newcastle, PSG was acquired by Qatar Sports Investments, a subsidiary of the Qatar Investment Authority, the Gulf state’s sovereign wealth fund.

The dividing line between state and private sector investment is murky regarding Manchester City.

The City Football Group owns the club with the Abu Dhabi United Group for Development and Investment (ADUG) as its 81 per cent major stakeholder.

In turn, ADUG, an example of the Gulf state’s problematic handling of potential conflicts of interest, is owned by Sheikh Mansour bin Zayed Al Nahyan, a senior Abu Dhabi ruling family member and Minister of Presidential Affairs for the UAE.

With its franchise of stakes in other clubs in the United States, Australia, India, Japan, Spain, Brazil, Uruguay, China, Belgium, France, and Italy, City Football Group introduced a new corporate business model for global soccer.

La Liga’s complaint to the European Commission challenges that model even if the Commission’s writ is limited to EU members Belgium, France, Italy, and Spain.

Dr. James M. Dorsey is an award-winning journalist and scholar, an Adjunct Senior Fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies, and the author of the syndicated column and podcast, The Turbulent World with James M. Dorsey.